That electricity supply in Nigeria is still a spasmodic flourish, a yo-yo at best, is fairly and squarely the missteps and myopia of former President Goodluck Jonathan. This is the unanimous assertion of the investors behind Distribution Companies, DISCOs, providers of last mile services in the electricity supply value chain.
Eleven DISCOs emerged from the unbundling of the Power Holding Company of Nigeria in November 2013, a move that was regarded as the right step in the right direction of making electricity supply constantly available to all Nigerians.
The successful DISCOs are: West Power and Gas, the preferred bidder for the Eko Distribution Company; NEDC/KEPCO, Ikeja Distribution Company; 4power Consortium, Port Harcourt Distribution Company; Vigeo Consortium, Benin Distribution Company; Aura Energy, Jos Distribution Company; Kann Consortium, Abuja Distribution Company; Integrated Energy Distribution and marketing Company, the preferred bidder for the Ibadan and Yola Distribution Companies; Sahelian Power, Kano Distribution Company; Trancorp/Woodrock Consortium, Ughelli Power Plc; Mainstream Energy Limited, Kanji Power Plc; and CMEC/EUAFRIC Energy JV for Sapele Power Plc.
Alas, at the time of the acquisition of the unbundled companies, core investors paid $2.238billion which they sourced at N150 to a dollar. Two years later, dollar oscillated between N370 and N400, an investment-debilitating increase. This has plunged many of the investors into harrowing webs of debts. Many have lost their assets and savings in the process.
Life could not be more difficult for genuine, patriotic Nigerians who saw an opportunity to bail their fellow countrymen out of the cauldron of darkness but got frustrated by the system. But their migraine does not end there.
Then, the federal government promised to invest about $7billion to revamp the old, obsolete networks; maintenance of network equipment; investment in trained manpower and customer data; increase meter penetration; and resolve health, safety and environmental issues. All these remain typical Nigerian politicians’ promises, empty and vainglorious. To compound the problems of the investors since the conclusion of the privatisation process, they are now faced with huge operational challenges, clearly visible in their operations and service delivery; lack of sufficient energy supply from the national grid; and a near absence of investments due to poor revenues, inadequate tariffs and external funding constraints.
According to the Executive Director, Association of Nigerian Electricity Distributors, an umbrella body for the DISCOs, Sunday Oduntan, “In that agreement, there is a list of what the Federal Government was going to do and what we as operators, the DISCOs, GENCOs and investors are to do. But unfortunately, the government reneged on all its obligations and promises. And those things that the government offered to do, they were essentially preconditions meaning if I do this, you will do that. So, if I don’t do this, you will not be able to do that. An example is the issue of tariffs. From day one, the term they used was cost reflective tariff. The simple meaning of that is what can be called appropriate pricing of products. Tariff is about price and electricity is the product.”
In a recent interview, Jay McCoskey, CEO of Port Harcourt Electricity Distribution Company (PHED), explained that there is low power generation which in turn leads to low power distribution because Nigeria produces only about a third of the power needed in the country due to poor gas supply arising from activities of militants as well as low water levels for the hydro plants in the north. He emphasised that the DISCOs not being able to afford to meter all their customers can also be attributed to the fact that distribution companies are all in debt and therefore, cannot get loans from banks. He added ominously, “There’s no distribution company in Nigeria that is bankable right now.”
This is where Captain Hosa Okunbo, one of the investors that acquired the Yola Distribution Company has a problem with the past administration. Speaking with Osasu Igbinedion of The Osasu Show, Okunbo lampooned the Jonathan administration saying that the monies spent on purchasing the DISCOs should have been used in revamping the distribution chain. He averred that the Goodluck Jonathan administration should have sold the DISCOs at $1 so they could use the billions of dollars paid into the government’s coffers to revamp obsolete networks and equipment across the country.
“The federal government has not met most of the conditions under which we should operate as a distribution company, and the best thing that can happen today to us or to me is for the government to take back the assets and pay us back our money. We are paying the loan in Yola; we are also paying interest in Yola and Yola has already been handed over to government two years ago, yet, we, as investors, have not been refunded. Is that how to do business? Is that how to encourage investors to do business in Nigeria? Continuing, the billionaire oil magnate and philanthropist, said, “We brought business out of those entities; In fact, those assets should have been sold for $1, and let us now invest our money that we paid to the federal government at so much. How can you have sold these assets to Nigerians in dollars when the assets are in naira?”
Literally emitting fire, Okunbo also said, “I am not a thief, I have been servicing debts from my hard-earned money, servicing debts of a business that is not working. We carry staff that we are constantly paying salary.” Oduntan shares Okunbo’s sentiments; “We have invested in the system but the investment is not enough obviously because the business is not bankable. The business is not bankable because we are the ones carrying the deficit of the industry in our own books.” He suggested that since government owns 40 per cent of the shares, it could consider divesting part of its shares in the power firms to help raise the needed liquidity in the sector. Where does Nigeria go from here?
